Maniruzzaman, Munir

English

Name not available

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Kluwer Arbitration Blog  
2011 CPR Institute Award Winner – Outstanding Electronic Media 
15 Jul 2012 
 
The Authority of a Truncated Arbitral Tribunal – Straight Path or Puzzle? 
By Munir Maniruzzaman, University of Portsmouth,  
for ITA 
 
The situation of a truncated arbitral tribunal may be caused by various factors. It 
may arise when a three-member tribunal during the course of the arbitral 
proceedings and before the rendering of the award does not remain the same at 
some point, meaning that one of the members of the tribunal dies, resigns or 
fails to attend the proceedings or deliberations leaving the two other members at 
the helm. In such a situation the questions arise: what is the authority of a 
truncated tribunal? Can it go ahead and render a valid award? These issues have 
arisen frequently before arbitral tribunals and also before national courts at the 
stage of enforcement of arbitral awards and they have had a rough ride at both 
levels. Arbitrators are often baffled with the prospect of the enforcement of their 
awards whilst exercising their authority as a truncated arbitral tribunal in the 
sense of the proverbial puzzle: ‘to be or not to be, that is the question’, i.e. 
whether or not to exercise the authority to go ahead with the arbitration and 
render an award. The purpose here is to examine the issues in light of modern 
international arbitration law and practice as well as most recent relevant 
domestic case law on arbitration and to recommend some pragmatic approaches 
for the safe course of action. 
 
On the issue of the power of a truncated arbitral tribunal the recent trends in 
international arbitration law and practice seem to be a converging one (i.e. a 
truncated tribunal’s authority to proceed), subject, however, to certain 
institution-specific approaches to the issue as will be clear from the following: 
some international arbitration rules such as the LCIA (1998), WIPO (2002), 
ICDR (2011), PCA and JAMS (2011) invariably allow the truncated arbitral 
tribunal itself to go ahead with the arbitration if the situation arises at any stage. 
However, these rules have provided some balancing factors for the tribunal to 
weigh in determining whether to proceed or not. The common ones are: (i) the 
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stage of the arbitration; (ii) the explanation given by the non-participating 
arbitrator; and (iii) such other matters considered appropriate in the 
circumstances of the case. Some other arbitration rules such as UNCITRAL 
(2010), ICC (2012), Swiss Rules on International Arbitration (2012), CIETAC 
(2012) specifically point out the milestone that such a truncated situation will 
only be considered after the closure of the hearings or proceedings, meaning 
that the authority of the truncated tribunal may ensue after that point is reached 
but not before. And before that stage the defaulting arbitrator has to be replaced. 
Some rules such as UNCITRAL, CIETAC, Swiss, and ICC bestow the power to 
decide in such truncated situation on the appointing authority and not on the 
tribunal itself. Thus, although modern international arbitration law is in favour 
of the truncated tribunal to proceed, the approach is not always straightforward 
as there are some hurdles to overcome in the sense of maintaining the balance of 
the situations. 
 
It is noteworthy that in the UNCITRAL Model Law (Arts. 14 and 15) and the 
ICSID Convention (Art. 56) the truncated situation of the tribunal is dealt with 
differently. The mechanisms used in them underscore the continued cooperation 
and involvement of the members on a three-member arbitral tribunal and its 
non-frustration and the principles of expediency and immutability of the 
tribunal are encouraged. In such truncated situation the emphasis under both the 
regimes is to fill in the vacancy by reappointment within short-time limits, 
hence little chance for a party for dilatory tactics. Thus, the Model Law and the 
ICSID prescriptions reinforce the original expectation of the parties that the 
decision be rendered by a three-member tribunal, no matter what deviation from 
that might have occurred after the commencement of the arbitration and for 
whatever reason. 
 
International arbitral case law and juristic views seem to suggest a bias towards 
the tribunal’s authority to deal with the truncated situation in the exclusive 
sense, perhaps for the sake of the tribunal’s mission to settle disputes and its 
duty to fulfil that mission expediently. The approach appears to prove the 
tribunal’s inherent power to deal with the matter on its own. In the Iran-US 
Claims Tribunals’ practice this approach appears to be consistent. Furthermore, 
in the Himpurna case (1999) the remaining two arbitrators gave a short shrift to 
the objection to its acting as a truncated tribunal in light of the existing 
precedents and concluded that: 
 
 “The weight of well established international authority makes clear that 
an arbitral tribunal has not only the right, but the obligation, to proceed 
when, without valid excuse, one of its members fails to act, or withdraws 
or – although not the case here – purports to resign.” [Final award of 16 
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October 1999 in adhoc arbitration: Himpurna California Energy Ltd. V. 
Republic of Indonesia, XXV YBCA 186 (2000), 194] 
 
This is in line with what the ICC tribunal expressed in the award in Ivan 
Milutinovic PIM v. Deutsche Babcock AG that it is “more and more accepted 
that in international commercial arbitration the possibility of delaying tactics is 
a serious concern and the elimination of these effects is a primary task of all 
involved.” 
In reference to the Himpurna tribunal’s view quoted above, Judge Schwebel 
opines that such a position of the tribunal is “the better, but not the only, view of 
the matter” [S.Schwebel, “Injunction of Arbitral Proceedings and Truncation of 
the Tribunal”, (2003) 18:4]. He also concluded in his study on the subject that: 
“While the precedents are not uniform, and the commentators are 
divided, the weight of international authority, to which the 
International Court of Justice has given its support, clearly favours 
the authority of an international tribunal from which an arbitrator 
has withdrawn to proceed and to render a valid award.” [S. 
Schwebel, Justice in International Law: Further Selected Writings 
(CUP, 2011), p.206]. 
However, one has to be cautious in view of the recent wave of national court 
cases (i.e. Swiss, French, Russian, Chinese and U.S.) where the enforcement of 
awards rendered by truncated tribunals was declined irrespective of whether an 
absentee or defaulting arbitrator was acting with the purpose of sabotaging the 
proceedings, or the truncated situation was caused by the death of an arbitrator 
or by the formal resignation of an arbitrator, or his participation in the arbitral 
proceedings was disabled by other exterior factors. The ground for such refusal 
of enforcement of awards was commonly found to be that an award rendered by 
only two arbitrators was not in accordance with the agreement of the parties on 
a three-member tribunal or in some cases contrary to the principles of equality 
of treatment and equal representation on the arbitral tribunal [e.g. Cour d’Appel, 
Paris, 1 July 1997 Agence Transcongolaise des Communications – Chemin de 
fer Congo Océan (ATC-CFCO) v. Compagnie Minière de l’Ogooue – Comilog 
S.A., XXIVA YBCA, 281 (1999); Swiss Federal Court, Ivan Milutinovic PIM v. 
Deutsche Babcock AG. - the ICC Court of Arbitration in Case No. 5017 (1987); 
First Investment Corp. of the Marshall Islands v. Fujian Mawei Shipbuilding, 
Ltd., 2012 WL 831536 (E.D. La. Mar. 12, 2012)]. 
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It is noteworthy that the courts of the traditionally popular hubs of arbitration 
and pro-arbitration countries such as Switzerland and France questioned the 
validity of a truncated tribunal’s award. 
In international arbitration case law and juristic views the issue of truncated 
tribunal has been dealt with from the tribunal’s own perspective, i.e. to give 
effect to the considerations of expediency, efficiency of the process and the 
accomplishment of the mission of dispute resolution. While, on the other hand, 
at the other end of the scenario when the award rendered by a truncated tribunal 
goes to the enforcement stage before a national court the perspective turns out 
to be different which endorses the parties’ original wish to get the dispute 
resolved by a three-member arbitral tribunal. 
What is then the takeaway from the above? Well, international arbitrators need 
to be pragmatic to give a 360 degree-angle approach to the issue as at the end of 
the day they have to render an award that is enforceable. Thus, the tribunal can 
take some careful steps as follows: 
First, if the truncated situation arises for whatever reasons at the beginning of 
the proceedings or at some stage where disruption of the proceedings is 
reasonably manageable, certainly replacement is inevitable unless the parties 
have provided otherwise in their agreement. 
Secondly, if the truncated situation arises at an advanced stage or at the close of 
the hearings, the absentee arbitrator, unless he has formally resigned, should be 
kept informed of the day-to-day developments of the proceedings and the 
tribunal’s deliberations and his feedback on them should be sought as from 
other members of the tribunal. In this situation the tribunal will be considered to 
be a fully constituted one and the absentee arbitrator will be deemed to have had 
the opportunity to act as any other member of the tribunal and the appointing 
party should be informed of the situation and non-cooperation, if any. In the 
circumstances, there is no reason why the tribunal should not proceed to render 
an award given the reasonable steps it has taken and the implications of time 
and expense factors for the parties if it did otherwise. 
Thirdly, if the truncated situation arises at an advanced stage of the proceedings 
or at the close of the hearings because of the sudden death of an arbitrator or his 
participation is fully incapacitated by external factors, the reasonable step for 
the tribunal will be to consult the parties as well as the appointing authority and 
proceed accordingly and to weigh with them the time and expense factors and 
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the expediency of the parties’ initial intention to get the dispute settled by a 
three-member arbitral tribunal. 
This is not to say that the above prescription fully rids a truncated tribunal of its 
puzzle in some respects about the prospect of the enforcement of its award by a 
national court, it may, however, boost some confidence as logical steps in the 
circumstances have been taken. 
 
 


The authority of a truncated arbitral tribunal: straight path or puzzle?

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The authority of a truncated arbitral tribunal: straight path or puzzle?

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